China to build lithium processing plants in Zimbabwe; also developing JV in Australia

Chinese companies that have made multimillion-dollar acquisitions in Zimbabwe will have to build lithium processing plants after the country banned the export of the metal in its raw form. In Australia, Tianqi Lithium announced that it had succeeded in producing Australia’s first battery-grade lithium hydroxide, which is a key material for making lithium batteries for electric vehicles, at its Kwinana plant.

In Zimbabwe, companies must either set up local processing plants or provide proof of exceptional circumstances – and receive written permission from the government – before lithium can be exported. Zimbabwe is estimated to have the largest unexploited reserve of lithium in Africa and is the sixth-largest producer in the world. It imposed the export ban at the end of December, as part of efforts to have lithium – the key raw material in electric-vehicle batteries – processed locally.

The government also wants to stop artisanal miners who dig up and take the mineral across borders. Harare says it has lost USD1.8 billion in mineral revenues due to smuggling, artisanal mining and exports to South Africa and the United Arab Emirates (UAE). Chinese firms that had made recent lithium investments in Zimbabwe would need to build processing facilities there at a cost of hundreds of millions of dollars so they can export higher value lithium chemicals. It would take two to three years to complete construction and commissioning. Lithium prices have surged by about 1,100% to a record in the past two years, with supply struggling to keep up with high demand. Lithium carbonate spot prices in China – the world’s biggest electric-vehicle market – climbed to a record USD84,000 per ton in November, according to Benchmark Minerals’ lithium price index.

In the past year, three Chinese companies – Zhejiang Huayou Cobalt, Sinomine Resource Group and Chengxin Lithium Group – have acquired lithium projects in Zimbabwe worth a combined USD679 million, amid the worldwide race to go green. Huayou Cobalt and Chengxin Lithium are already developing processing plants. Huayou Cobalt acquired the Arcadia hard-rock lithium mine outside Harare for USD422 million from Australian company Prospect Resources. It is investing USD300 million to develop the mine to expand production for the electric-vehicle market. When Huayou Cobalt bought Prospect’s stake in the mine, one of the conditions from the Zimbabwean government was that the firm would process the mineral locally to make lithium-ion batteries. The company said it would process first-line lithium concentrates of spodumene and petalite in the first phase. In phase two the company is targeting production of lithium sulphates. Meanwhile, Chengxin Lithium spent USD77 million on a deal last year that includes mining rights in the largely unexplored Sabi Star lithium and tantalum mine project in eastern Zimbabwe. A groundbreaking ceremony was held there in December for a USD130 million lithium processing plant, the South China Morning Post reports.

In Australia, Chengdu-based Tianqi Lithium has set up a joint venture with the Australian company IGO at the Kwinana Industrial Area outside Perth. The joint venture was established in December 2020 with USD1.4 billion in capital, with the Kwinana plant playing a pivotal role in manufacturing lithium hydroxide monohydrate from spodumene. The spodumene is sourced from the jointly owned Talison lithium mine in Greenbushes, which is located 250 km to the south of Kwinana, with the finished products shipped from Western Australia’s Port of Fremantle. According to Tianqi Lithium, Australia produces 51% of the world’s lithium, while China has bought over 90% of the country’s lithium in 2022 based on figures from the Australian Bureau of Statistics.

Tianqi Lithium CEO Raj Surendran expects global lithium demand will triple to 1.5 million tons by 2027 amid the growing demand for electric vehicles. The development of the lithium processing and associated downstream industries in Western Australia will support thousands of local jobs, said Surendran, with 200 employees currently employed at the Kwinana plant. “For example, clean energy technologies need a range of minerals, including cobalt, lithium and rare earth elements,” he said. Producing and exporting the key minerals could create up to 52,000 Australian jobs in regions like Western Australia, the Pilbara and South Australia by 2050, said Surendran, citing government estimates.

According to a global mine report by PwC released in June 2022, lithium ranked second largest in terms of critical minerals by deal value at USD4.1 billion in 2021 after copper because companies “take advantage of expected rising EV demand for lithium”, the South China Morning Post reports.